Protect Your Wallet Before Falling In Love
I read once that falling in love produced the same effect on the brain as a hit of cocaine. I have no personal drug experience but have been in love and know that, in the early stages of a relationship, you are not leading with your head.
When you’ve been hit by Cupid’s arrow, you need to make sure your finances come out intact even if your heart doesn’t. The financial stakes are generally higher for individuals over 50.
There is also an increasing number of singles in this age group. The average age of widowhood is 59, and the incidence of divorce after 50, also known as gray divorce, has nearly doubled since 1990. The Pew Research Center also found the divorce rate for adults 65 and older tripled over that same period.
Divorce after 50 can be financially devastating for several reasons, primarily time. There is no time to make up for lost
income or savings. There are fewer years to retrain for a new career if needed. Another factor is that many Americans are not prepared for retirement in the first place, and dividing inadequate savings will only make the situation worse.
Women typically experience a 40% to 45% decrease in their standard of living, while men’s standard of living decreases 20% to 25%. Even with all the dire financial statistics, a Stanford University study found that 69% of gray divorces are initiated by women.
One study suggested the best way to recoup your financial footing was to remarry. Before you can remarry, you need to find that special someone. Finding your next partner might be challenging and, as a result, more people are turning to online dating services. While online dating sites can introduce you to many interesting people, they can pose additional risks and can be hotbeds for scammers. AARP Fraud Watch Network lists the following warning signs of potential fraudsters:
- He or she professes love too quickly.
- The person immediately wants to leave the dating website and communicate with you through email or instant messaging.
- Your new romantic interest sends you a picture that looks more like a model from a fashion magazine than an ordinary snapshot.
- He or she repeatedly promises to meet you in person but always seems to come up with an excuse to cancel.
- He or she makes a request for money, for any of a variety of reasons: travel, medical emergencies, visas or other official documents, or losses from a financial setback.
It is not always possible to detect a person with questionable intentions before getting into a serious relationship. One suggestion to minimize this risk is to take the relationship slowly, emphasizing deep conversations and open communication.
Discuss how comfortable you are with borrowing money and for what reason. Identify any outstanding debts. Discuss day-to-day money-management arrangements. I generally recommend a “yours, mine and ours” approach by establishing one joint account for equitably shared expenses. It is also important to discuss spending priorities, lifestyle goals and retirement aspirations.
Remarriage in later life comes with its own set of pitfalls and exposes you to additional financial risks. There are ways to reduce your financial risk and protect your assets. A good idea is to make sure your future partner has the means to support themselves—either with a job, investments or income from family sources. It would also be easy to turn over financial control to another person, but realize they might not always act with your best interests in mind. Educate yourself and ask questions.
So, even though you have stars in your eyes, keep them open and approach new relationships with a bit of skepticism. Your wallet—and your heart—might be at risk. As with any relationship, proceed with caution and pay attention to impressions your new romantic interest makes on trusted friends and relatives.